January 23, 2006

Blaming Wal-Mart is counterproductive

For some reason Wal-Mart has become a point of enormous contention in the United States. Wal-Mart has been furiously vilified by the left with books and movies. It has consistently been blamed for nearly every ill in the country, including the disappearance of town centers, the perceived stratification of wealth in the country, and the growing number of Americans without health insurance. All of this has made for great politics. Wal-Mart is now shelling out millions for lobbying and has a “war room” to prevent harmful policy and to create beneficial P.R. But regardless of how exciting the controversy may be, it is still silly.

While Wal-Mart may be unsightly, it is a boon for America’s poor, providing beneficial competition in areas where savings on essentials is needed the most. This may seem like a rehashed talking point, but that may be because it has merit. When Wal-Mart enters a market, retail prices drop 5–8 percent and that saves consumers $16 billion every year. But on top of that, Wal-Mart is not even that bad of an offender. Its employees rely on Medicaid and child healthcare support less than those of the rest of retail.

But the sentiment against Wal-Mart is not just misguided; it is empowering lobby groups who having nothing but their own interests in mind. This is best exemplified by Maryland’s legislature which earlier this month overturned their governor’s veto and passed a law requiring private employers of 10,000 or more employees (which is coincidentally only Wal-Mart) to spend a minimum of eight percent of their payroll on employee benefits. The legislative revolt seems to be the result of a host of groups working together for their own individual ends: There are labor unions looking to inflate wage rates, retail outlets looking to stick it to their competitor, and politicians looking to lower budget expenses on healthcare in order to avoid tax hikes. The best indication of this is that while many have played this as a victory for the working class, cursory inspection shows the opposite.

The law simply forces Wal-Mart to raise its prices in the face of higher labor costs. This will hurt the people who shop at Wal-Mart as opposed to those who have the money to shop at the high-priced, yuppie alternative. So now the poor are going to end up paying more for their own healthcare in the form of higher prices at retail stores instead that money coming from alternatives like progressive income taxation.

But then what are healthcare advocates to do about the state of healthcare in this country? Well for one, they should acknowledge that Wal-Mart and every other firm is doing nothing but playing the game our government set up. If you put firms in charge of paying for the nation’s health care they will only try to minimize that cost. Denying this fact and using the government to force Wal-Mart to take responsibility for what is fundamentally not its own, but rather the government’s, is ridiculous. Health care may be the biggest social problem in this country, but placing responsibility for that problem on Wal-Mart instead of the government will only exacerbate the problem.